Using an ongoing IT reorganization project at Merck as an example, Tim Rehac of BusinessEdge Solutions discussed changing the structure of an IT organization in his presentation “Implementing a Service-Oriented Organization in IT” at INTERPHEX last week. The session showed how an IT organization could be transformed into a more efficient and innovative unit. Rehac first outlined the common problems facing many IT organizations, including struggling to meet demands and requests that come from all parts of the company, trying to prioritize what requests to fulfill, and working with a budget that may not allow them to invest in infrastructure.

The service-oriented approach shifts the IT organization’s focus to providing services in a way that works best for the business. This is done by identifying services and levels of services to offer, establishing goals for managing the workflow and the organization’s resources, and creating a plan to implement the new model. For example, the organization would catalog the services it provides and benchmark those services and costs against outside competition. This helps the IT organization justify spending and funding. Another important aspect of this approach is to involve business leadership when managing and prioritizing the IT requests and projects. This takes the sole prioritizing duties off of IT’s shoulders and the requests/projects are considered from a business perspective. In this way, Rehac explained, the IT organization is set up to run as its own business.

As described in the presentation, this approach can lower costs because the focus is on efficiency and innovation; Merck’s IT group saved about $100 million in three years. Rehac reported that this approach has been a success so far at Merck, and that the company plans to implement a service-based model in several other internal service functions, such as human resources, facilities and finance.

It makes sense to run an internal service like this. So far it seems to be working for Merck, but Rehac did point out that it didn’t work for everyone. Apparently, “old-school” IT managers had trouble adjusting to this new system. A major overhaul like this can certainly take some getting used to. I’m interested to hear first-hand accounts of this kind of reorganization project. Does your company use a service-oriented approach in its IT department? If so, were you with the company as they made the change?

To read about how pharma manufacturers are integrating software and processes using service-oriented architecture, see “The New Biopharmaceutical Blueprint: Service-Oriented Architecture in Manufacturing” from Pharmaceutical Technology’s November IT Supplement.